Ashish Ranjan from Asian Development Bank shares views on L1 Bidding System

A shift towards holistic contractor evaluation is critical for sustainable, high-quality road infrastructure delivery.

Ashish Ranjan
Sustainable Development Manager
Asian Development Bank

Limitations in Road Projects

Public procurement in India, particularly in the road sector, is primarily based on awarding contracts to the lowest financial bidder (L1) under NHAI and State PWDs. While this method aims to minimize costs, it frequently results in schedule delays, cost overruns, and compromised quality. Projects awarded solely on financial criteria often suffer from inefficiencies, with significant gaps between the initial bid price and the actual project cost upon completion. These recurring issues highlight the need for reforms in contract management practices.

The risks of the L1 system have become more evident with the rising incidence of abnormally low bids. NHAI and parliamentary committees have expressed concerns about contractors quoting 20–40% below project estimates.

Strengthening the Procurement Framework

India’s procurement framework is guided by laws such as the Indian Contract Act (1872), the Competition Act (2002), and the General Financial Rules (GFR). The GFR stresses transparency and accountability, while prohibiting practices such as splitting contracts to bypass bidding norms. Oversight is ensured by institutions including the Central Vigilance Commission (CVC), the Comptroller and Auditor General (CAG), and parliamentary committees.

To move towards more sustainable and high-quality infrastructure delivery, it is essential to integrate weighted decision systems with strong pre-qualification criteria and decision-support tools. This would ensure that contractors are evaluated not just on the basis of cost but also on capability, reliability, and track record. A shift to holistic contractor evaluation is therefore critical to balance cost-efficiency with long-term quality and timely execution in India’s road sector.